Godrej Agrovet Ltd. share price target

YoY to INR9.4b). EBITDA margin contracted 240bp YoY to 6.5% (v/s est. 8.3%), mainly due to lower margin in crop protection and palm oil. EBITDA declined 15% YoY to INR1,197m (v/s est. INR1,561m). Adj. PAT was up 10% YoY to INR1,040m due to deferred tax benefit (v/s est. INR958m). Animal feed drives performance: Realization improvement in animal feed biz (+21% YoY) drove segment revenue growth of 32%; EBIT/kg stood at INR1.3 (up 1.7x YoY; flat QoQ). Astec posted strong revenue growth of 24% while EBITDA declined 32% YoY on account of INR120 inventory loss (related...

Revenue in-line; EBITDA/adj. PAT below estimates: Consol. revenue grew 15% YoY to INR17b (our estimate: INR16.6b), mainly led by the animal feed segment (+20% YoY to INR8.9b). EBITDA margin contracted by 105bp YoY to 8.3% (our estimate: 9.5%), mainly on account of higher other expenses. EBITDA grew 2% YoY to INR1,419m (our estimate: INR1,584m). Adj. PAT was down 5% YoY to INR760m (our estimate: INR916m). Margin pressures evident: Animal feed revenue increased 20% YoY, led by price hikes of 13% YoY (+9% QoQ). However, segmental EBIT margin shrank...

India has a huge opportunity in the palm oil business as it imports more than 90% of its demand due to supply constraint of fresh fruit brunches (FFBs). Oil palm plantation in India is regulated and GOAGRO has participated in the governments Oil Palm Development Program (OPDP) for accessing FFB produce from farmers in designated areas, thus being an asset-light model. GOAGRO being the largest palm oil manufacturer in India (35% market share) is well placed to capitalize on this opportunity as the government increases the area under cultivation. We expect the segment to deliver revenue CAGR of 11% over FY18-21 to INR8,046m by FY21 on account of increasing availability of FFBs (on higher mix of mature plants), increase in oil plantation area (currently has access to ~66k hectares of land and plans to add 2-2.5k hectares per year), and improvement in the Oil Extraction Ratio (OER).

Godrej Agrovet Ltd (GAVL)'s Q2FY19 revenue was in-line with estimates, while higher expenses impacted operating profit. Its revenue grew by 11.4% yoy to Rs1,588cr, while EBITDA declined by 3.7% yoy to Rs141cr during the quarter due to lower operating leverage in animal feed (in Aqua) and palm oil segments. Net profit was up by 16.7% yoy to Rs94.2cr led by increase in other income.

Godrej Agrovet Ltd. (GAVL), part of the conglomerate Godrej group, is an agri-business company operating in five business verticals- animal feed, crop protection, palm oil, dairy and processed foods.

GoI has increased its investment towards agricultural and poultry industry which will benefit GAVL with its diversified business verticals coupled with pan India presence and established Godrej brand. Its significant investments towards R&D; and diversified business model would help to drive growth, optimize capital...

We recently met the senior management at Godrej Agrovet (GAVL) to get an insight into overall business model of the company and its position within the various business segments. GAVL is a well diversified agri business player having strong brand presence at a PAN India level. After being incorporated in 1991 GAVL has expanded exponentially both organically and through prudent strategic acquisitions (Cream line Dairy and Astec Life Sciences) thereby augmenting its product profile and widening its geographical footprint. GAVL currently operates across 5 key...

Godrej Agrovet Ltd. (GAVL), incorporated in 1991 in Gujarat is a subsidiary of one of the highly diversified Indian Conglomerate, the Godrej Group. GAVL is a diversified, research & development focused agri-business and animal feed company. GAVL holds leading market positions in the different businesses in which it operates - Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods. GAVL is the largest crude palm oil producer in terms of market share...

A tepid Q3 saw Godrej Agrovet (GAVL) report consolidated revenue/ PAT growth of 7% YoY to Rs 12.2 bn / Rs 450 mn (in line) due to lower commodity prices.